Real estate, post COVID-19 level 4 (since 2020)

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#3117687 18-Aug-2023 16:16

quickymart:
Handle9: Sustainable pricing isn’t the same as accessible or affordable. It just means it’s unlikely to collapse.

Whatever you want to call it, the prices are still too frikken' expensive/high/unaffordable.

I’m not disagreeing with that, just pointing out that public statements about price sustainability doesn’t equate with affordability. They are different things.

alasta

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#3117692 18-Aug-2023 16:28

tweake:

kinda.

one issue is people buying high priced houses then renting them out and of course have to charge high rents to cover the finance etc. so house prices dictate rent price to fair degree, so high house prices is a problem for renters.

You've fallen into the common trap of assuming that property investment is a cost plus margin business. In reality it's like any other investment, with capital values driven by market fundamentals.

tdgeek

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#3117693 18-Aug-2023 16:30

alasta:

You've fallen into the common trap of assuming that property investment is a cost plus margin business. In reality it's like any other investment, with capital values driven by market fundamentals.

Agree, what the market will bear, applies to houses and brocolli, etc

tweake

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#3117694 18-Aug-2023 16:33

alasta:

tweake:

kinda.

one issue is people buying high priced houses then renting them out and of course have to charge high rents to cover the finance etc. so house prices dictate rent price to fair degree, so high house prices is a problem for renters.

You've fallen into the common trap of assuming that property investment is a cost plus margin business. In reality it's like any other investment, with capital values driven by market fundamentals.

no, not at all.

its a charge whatever we can get away with and make on the capital returns.

there is no shortage of investors buying up expensive housing, no ability to make capital gains, but are making up for it with rents instead.

mattwnz

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#3117788 18-Aug-2023 19:22

tweake:

no, not at all.

its a charge whatever we can get away with and make on the capital returns.

there is no shortage of investors buying up expensive housing, no ability to make capital gains, but are making up for it with rents instead.

Not sure there are many around at the moment. There are a lot of new spec homes in my area that are between 600-800k and have dropped a lot. They aren't selling. Rent for them would problem be between 600-700 a week. They would qualify to get interest deductabilty on them due to them being new, but But at the current interest and other costs like rates would likely exceed the rent they can get. So the only thing that would get investors to buy them imo would be if the price dropped. I know someone who was looking at buying some rentals, but he said the fundamentals don't make sense at all and instead he purchased a business instead.

tweake

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#3117795 18-Aug-2023 19:41

mattwnz:

Not sure there are many around at the moment. There are a lot of new spec homes in my area that are between 600-800k and have dropped a lot. They aren't selling. Rent for them would problem be between 600-700 a week. They would qualify to get interest deductabilty on them due to them being new, but But at the current interest and other costs like rates would likely exceed the rent they can get. So the only thing that would get investors to buy them imo would be if the price dropped. I know someone who was looking at buying some rentals, but he said the fundamentals don't make sense at all and instead he purchased a business instead.

investors don't usually buy much new housing anyway. 2nd hand is cheaper. 600-700 week rent is not uncommon today for old homes.

a lot of the new housing isn't being bought because people can't sell their old house for the price they need. they can't offload the cost and make someone else pay for it. they are going to have to work for it instead.

but if heaps of people come into the country and need to rent, push rents up higher, then investors can afford to buy those overpriced houses, which means fhb can't buy them and they have to stay renting.

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heavenlywild

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#3117799 18-Aug-2023 19:50

Can I make a suggestion to mods to either rename this thread or lock it so we can have an updated title?

We can start a new thread on real estate!

mattwnz

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#3117855 18-Aug-2023 21:10

tweake:
mattwnz:

Not sure there are many around at the moment. There are a lot of new spec homes in my area that are between 600-800k and have dropped a lot. They aren't selling. Rent for them would problem be between 600-700 a week. They would qualify to get interest deductabilty on them due to them being new, but But at the current interest and other costs like rates would likely exceed the rent they can get. So the only thing that would get investors to buy them imo would be if the price dropped. I know someone who was looking at buying some rentals, but he said the fundamentals don't make sense at all and instead he purchased a business instead.

investors don't usually buy much new housing anyway. 2nd hand is cheaper. 600-700 week rent is not uncommon today for old homes.

a lot of the new housing isn't being bought because people can't sell their old house for the price they need. they can't offload the cost and make someone else pay for it. they are going to have to work for it instead.

but if heaps of people come into the country and need to rent, push rents up higher, then investors can afford to buy those overpriced houses, which means fhb can't buy them and they have to stay renting.

I understand that is the main reason the government changed the rules with interest deductability. Investors can get it in New homes, but not older homes. They want to leave the older homes for owners occupiers to then upgrade or develop over time. IMO it is about improving the standard of NZs housing stock. So investors do have a financial advantage when buying new over FHBs buying new.

tweake

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#3117858 18-Aug-2023 21:24

mattwnz:

I understand that is the main reason the government changed the rules with interest deductability. Investors can get it in New homes, but not older homes. They want to leave the older homes for owners occupiers to then upgrade or develop over time. IMO it is about improving the standard of NZs housing stock. So investors do have a financial advantage when buying new over FHBs buying new.

thats the idea.

but kiwis are more interested in short term gains not long term investments. average home ownership is down to 5 years now which is insane.

Handle9

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#3117859 18-Aug-2023 21:26

tweake:

mattwnz:

I understand that is the main reason the government changed the rules with interest deductability. Investors can get it in New homes, but not older homes. They want to leave the older homes for owners occupiers to then upgrade or develop over time. IMO it is about improving the standard of NZs housing stock. So investors do have a financial advantage when buying new over FHBs buying new.

thats the idea.

but kiwis are more interested in short term gains not long term investments. average home ownership is down to 5 years now which is insane.

Nah. It reflects the different phases of home ownership and changing demographics of buyers

Handle9

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#3117860 18-Aug-2023 21:30

Also it appears that the 5 year hold period is nonsense.

https://www.odt.co.nz/star-news/star-business/not-nation-flippers-where-kiwis-hold-homes-longest

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tweake

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#3117910 19-Aug-2023 09:41

Handle9:

Also it appears that the 5 year hold period is nonsense.

https://www.odt.co.nz/star-news/star-business/not-nation-flippers-where-kiwis-hold-homes-longest

"According OneRoof's data partner, Valocity, the current median hold figure of 6.9 years is the highest it's been in four years."

first thing is its oneroof, so big bias there.

its also a high of 6.9 meaning its been lower (like 5 years as mentioned), no doubt because sales have dropped right off in recent times. yet the typical average for nz is 7-8 years. to put that into perspective is UK is approx 10 years and USA is 14 years. so even going by their own information kiwis sell double that of usa.

so basically the article is BS from the RE companies to make it look like they are not doing anything bad, when in fact nz is actually a nation of flippers.

Handle9

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#3117946 19-Aug-2023 12:00

You are saying a published article is bad but providing no evidence yourself.

mudguard

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#3117947 19-Aug-2023 12:00

tweake:

When in fact nz is actually a nation of flippers.

I don't think it's that simple. Especially in Auckland. I would say changing jobs would influence how long you stayed in a house.

tweake

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#3117951 19-Aug-2023 12:30

mudguard:

tweake:

When in fact nz is actually a nation of flippers.

I don't think it's that simple. Especially in Auckland. I would say changing jobs would influence how long you stayed in a house.

but that exists in every country, yet we change houses far more often.

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